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Local Authority Pension Fund ForumBournemouth, 9 December 2016
Glencore: journey to date
2011• IPO after ~40 years as a private business
2013
• Merger with Xstrata creates largest commodity trader in the world and one of the largest mining companies
• New entity combines best practices from both businesses
Today
• Engagement with stakeholders at all levels of the organisation to understand concerns, manage impacts and translate expectations into business practices
2
Climate change and our business: a Glencore report
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New report provides information about how we are managing the opportunities and challenges presented by climate change across our business.
Report focuses on:• Approach to reporting on carbon management
• Asset resilience in a range of climate change scenarios
• Support for the use of renewable technologies
• Engagement with public policy
• Analysis of the coal business in the context of climate change
Next steps:• Meeting the obligations of ‘Aiming for A’ resolution:
report on progress in 2017
Delivering - AGM Resolution on Climate Change
• Operation-level energy and emission forecasts 2017-2020 to underpin strategic programmes to manage GHG footprint and identify emission reduction opportunities
Emissions Management
• Portfolio testing using 2016 IEA World Energy Outlook scenarios in progress
Portfolio resilience IEA scenarios
• Ongoing engagement with the business to identify and implement projects to reduce emissions
Low carbon R&D & investment strategies
• KPIs to be determined based on understanding of energy and emission forecasts. These likely to be set at an operational level
KPIs and executive incentives
• 2016 Annual Report to include a detailed section on progress to date in meeting ‘Aiming for A’ commitments
• Participation in local carbon policy development
Public policy positions
4
2030450 Scenario
20.7Btce
2030New Policy
23.1Btce
2013Actual
19.3Btce
Global Energy Demand: coal, oil & gas under key scenarios account for ~70% of demand to 2030 even with a US$100 price on carbon
5Source: IEA WEO 2016Btce : billion tonnes of coal equivalent – standardised coal quantity using coal with energy content of 7000kcal/kg or 29.31 GJ/tConverted to metric tonnes based on global average coal energy of 4850kcal/kg nar
GLOBAL PRIMARY ENERGY DEMAND
29%
25%
31% 21%
28.6% 22.8%
5%
6.2%
2% 10% 1.2%
2.9% 10.6% 4.0%
5.6 Btce8.2 billion tonnes*
5.7 Btce8.3 billion tonnes*
18.3% 26.8% 23.1% 8.5% 3.4% 13.3% 6.5%
COAL RENEWABLESBIO ENERGYHYDROOIL
3.8 Btce5.5 billion tonnes*
NUCLEARGAS
5.5 Btce 4.8 Btce
6.6 Btce 5.3 Btce
6.0 Btce 4.1 Btce 0.9 Btce0.5 Btce
2.0 Btce
0.2 Btce
1.4 Btce0.7 Btce
2.5 Btce
0.9 Btce
1.8 Btce
0.7 Btce
2.8 Btce
1.3 Btce
Regional demand: Asia drives coal electricity generation capacity growth to 2030 remaining the fuel of choice to meet industrialisation and urbanisation goals
Asia share of generation capacity• 1990 = 22%• 2000 = 38%• 2010 = 58%• 2020 = 70%• 2030 = 75%
Source: Platts World Electric Power Plant Database 2015 & Glencore Analysis & IEA WEO 2016 6
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GW Installed Coal Generation Capacity by Country/RegionSouth AmericaCentral AmericaNth AmericaEuropeMediterraneanAfricaOther AsiaTaiwanKoreaJapanIndiaChinaAsia TotalWEO 2016 New PolicyWEO 2016 Current Policy
Products analysis: electric vehicles drive demand for nickel and cobalt
EV revolution driving battery demand:
• Transition from consumer products to xEV/Energy Storage Systems (ESS)
• From small to large/more powerful batteries and mass production
• Nickel and cobalt chemistry emerging as technology of choice
Regulations on emissions driving EV supply
• Carmakers need fleet electrification to reach regulatory targets
• Tesla led the charge so far but big car makers catching up, with BMW, Porsche, Audi announcing new electric car models
Government subsidies help make EV affordable for the moment, but secure material supply is key
• Subsidies, investment in charging infrastructure and technology improvements drive EV acceptance and growing demand
• Car manufacturers need to decrease USD/kwh battery costs and ensure competitive supply chain
• Market players already looking to secure raw material at low cost
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Thank you
8